KeyCorp Earnings Summary
KeyCorp (NYSE: KEY) has reported encouraging financial results for the first quarter of 2025, marking a robust beginning to the fiscal year. The company revealed a net income from continuing operations attributable to Key common shareholders of $370 million, translating to $0.33 per diluted common share. This represents a significant improvement from the net loss of $279 million, or $(0.28) per diluted common share reported in the fourth quarter of 2024.
KeyCorp Financial Metrics
KeyCorp has demonstrated substantial progress across multiple financial metrics. The table below outlines key figures, providing year-over-year and quarter-over-quarter comparisons where applicable:
| Metric | 1Q25 | 4Q24 | 1Q24 | Year-Over-Year Change | Quarter-Over-Quarter Change |
|---|---|---|---|---|---|
| Net Income (millions) | $370 | $(279) | $183 | Up 102.2% | N/A |
| Earnings per Share (EPS) | $0.33 | $(0.28) | $0.20 | Up 65% | N/A |
| Total Revenue (billions) | $1.8 | N/A | N/A | Up 16% | N/A |
| Net Interest Margin | 2.58% | N/A | N/A | Up 56 basis points | Up 17 basis points |
Revenue Breakdown
KeyCorp experienced notable performance across its business segments. Below is a breakdown of revenue contributions by major segments, along with some analysis:
| Segment | Net Income (millions, 1Q25 vs. 1Q24) | Notable Changes |
|---|---|---|
| Consumer Bank | $118 million vs. $41 million | Taxable-equivalent net interest income rose by 21.8%, despite a 7.8% decline in loan and lease balances. Average deposits climbed 5.0%. |
| Commercial Bank | $321 million vs. $205 million | Net interest income up by 34.5%. Significant improvement in credit loss provision due to better asset quality and increased deposit balances. |
Analysis
The Consumer Bank segment demonstrated substantial growth, driven by a rise in net interest income despite a significant drop in average loans and leases. Deposit growth was notable, especially in money market deposits and certificates of deposit, reflecting consumer confidence.
The Commercial Bank segment's performance highlighted impressive growth in net interest income, backed by effective deposit growth strategies. The segment also smartly managed its provision for credit losses, recuperating from the previous uncertainty in economic outlooks.
Key Developments
During the quarter, KeyCorp managed to achieve positive operating leverage, with an increase in revenue outpacing essentially flat expenses. Noteworthy developments include:
- Net interest income increased by 4% quarter-over-quarter, demonstrating strong momentum.
- The net interest margin improved to 2.58%, a 56-basis point rise year-over-year.
- Nonperforming assets decreased by 9% quarter-over-quarter, alongside a 4% decline in net charge-offs.
- Commercial loans showed a $1.2 billion increment from year-end levels, highlighting strategic growth in lending.
Comments from Company Officers
KeyCorp Chairman and CEO, Chris Gorman, commented positively on the quarter's results, emphasizing the year-over-year revenue increase and the strategic positioning that led to reduced expenses. He noted, "Our strong financial results are a function of continued momentum with both clients and prospects. We enjoy strong earnings and business momentum and clearly defined net interest income tailwinds."
Dividends and Share Repurchases
KeyCorp declared a dividend of $0.205 per common share in January 2025, to be paid in the first quarter of 2025. Additionally, the company announced a new repurchase program authorized by the Board of Directors, allowing KeyCorp to repurchase up to $1 billion of its common shares either on the open market or through privately negotiated transactions. This indicates confidence in the company’s financial stability and long-term value growth.
KeyCorp Stock Forecast
With the strong start to 2025 and various favorable economic factors, KeyCorp stock projections look promising. Given their strong financial foundation and strategic expansion across multiple segments, the company exhibits potential for further growth. As per our projections based on fundamental analysis, the high end of the stock price forecast is $20, given solid financial performance and strategic moves. Conversely, a low projection would be $14, considering inherent market volatilities and economic conditions beyond the company’s control.
In conclusion, KeyCorp's performance in the first quarter of 2025 leaves them well-positioned to capitalize on prevailing market opportunities. With significant strategic progress, continuous profitability, and a strong capital position, KeyCorp presents an optimistic outlook to stakeholders and investors alike.
